SPA: Upcoming Acquisition Deal Will Likely Unlock Stronger Margin Expansion Potential

Analysts have raised their price target on 1Spatial from £0.75 to £0.95, citing expectations of stronger profit margins and a more attractive future earnings multiple, despite slightly slower projected revenue growth.

What's in the News

• VertiGIS Ltd. has reached an agreement in principle to acquire 1Spatial Plc for approximately £87.1 million at a possible offer price of £0.73 per share, with support already secured from shareholders representing 33.8 percent of the issued ordinary share capital, including irrevocable undertakings from the largest shareholder group and a non binding letter of intent from the second largest shareholder (Key Developments).
• A formal VertiGIS offer is expected to be implemented via a Scheme of Arrangement, with a deadline of January 9, 2026 for VertiGIS to announce a firm intention to make an offer or to walk away. The 1Spatial Board currently intends to recommend the offer subject to final terms and documentation (Key Developments).
• 1Spatial has been appointed prime contractor by Ordnance Survey to deliver the National Underground Asset Register Data Transformation and Ingestion Service, a £4.2 million contract over an initial two year term, underpinning a Government Digital Service initiative to create a single digital map of underground infrastructure across England, Wales and Northern Ireland (Key Developments).
• The company signed a £1 million SaaS contract with UK Power Networks to expand deployment of its 1Streetworks platform over 15 months, with an option to extend. The contract aims to automate planning for up to 30 percent of c. 40,000 annual works and materially reduce road closures and disruption (Key Developments).
• 1Spatial entered into a USD 1.7 million annually renewing Enterprise Agreement with the California Department of Transportation, consolidating multiple licences and increasing annual licence revenue by about USD 500,000 versus FY25. The agreement positions the platform as a core data governance tool across major transportation programmes, with further expansion expected in FY27 (Key Developments).

Valuation Changes

• The fair value estimate has risen from £0.75 to £0.95 per share, reflecting a materially higher implied upside for 1Spatial.
• The discount rate has increased slightly from 9.36 percent to 9.62 percent, indicating a modestly higher perceived risk or required return.
• Revenue growth has been revised down from 8.68 percent to 7.68 percent, signalling slightly slower expected top line expansion.
• The net profit margin has increased significantly from 13.93 percent to 28.26 percent, pointing to a much more profitable earnings profile.
• The future P/E multiple has fallen notably from 18.25x to 11.32x, implying a more attractive valuation on expected earnings.